Professional Indemnity - what are you liable for ?

[Whitey]

Since contracts don't cover every eventuality, and will be tested anyway when a client is unhappy, how do professional webmasters or agencies protect themselves against risk or failure of some kind ?

What do companies ask from their professional service providers as an indicator and what are the perceived risks they want coverage for?

I've often wondered if the industry has adequate coverage.

[BeeDeeDubbleU]

I work mainly with small businesses in the UK and I have never been asked if I am insured (I am incidentally).

[Whitey]

Do you consider the insurance adequate ?

[BeeDeeDubbleU]

Well I have coverage for £1M andit cost me over £300 per annum but as with all insurance you never know if it's right until you try to make a claim. ;)

Actually I only use it to add a bit of credibility to my business. As I said, I deal mainly with small businesses and with the type of work I do I cannot really see any circumstances where they would make a claim on me.

[piatkow]

As a comparison musicians consider £3M standard for public liability insurance, and that is the minimum that you would need to play a local authority venue.

[Whitey]

That's the problem with quantifying the coverage , when you can't imagine what it could be for.

But i think with larger clients they would require a lot more, especially if they are website dependent business'. Let's say , in the eyes of your client , tactics didn't meet expectations , or tactics were perceived to have led to a drop in revenue. And suppose that client was a blue chip business ?

[cmendla]

I'm not sure how it works outside the US, but in the US, doing business as a corporation or LLC has a lot of advantages. As long as you follow the rules, you should only be able to be sued for the value of your business and not your personal assets.

[willybfriendly]

I'm not sure how it works outside the US, but in the US, doing business as a corporation or LLC has a lot of advantages. As long as you follow the rules, you should only be able to be sued for the value of your business and not your personal assets.

Not always the case. After consulting with out attorney we chose NOT to incorporate. Seems it does not always shield against personal liability (esp for negligence). If you are a one man shop you end up in a situation where the business can be sued and you can also be sued.

The example given was driving a company vehicle through the front of someone's house. If it was an employee driving, the homeowner would make claims against the business and the employee. If you are the only employee, well...

[Whitey]

I agree. Staff and executives are very exposed.

LLC or limited companies provides some protection, but not much when it comes to personal responsibilities.

[aspdaddy]

willybfriendly, the above post did state "As long as you follow the rules" - if you are personally negligent nothing will protect you. Liability insurance will onjly protect you from accidents.

The OP mentioned risk of failure, I actually make this contractual.

[Whitey]

Hmmm ..... but often the rules are not always clear or covered , even in good contracts. Ask a lawyer , it's how they make money.